John Kennedy: Biden’s infrastructure plan has ‘more red flags than the Chinese embassy’
Sen. John Kennedy, R-La., talks infrastructure plan, packing the Supreme Court and reopening schools.
Jay Powell has no idea what trouble he’s in. In a "60 Minutes" interview aired Sunday night, the mild-mannered Fed chair dared to suggest that our economy was on the cusp of "growing much more quickly," and predicted better-than-expected job creation ahead.
That did not sit well with Nancy Pelosi, D-Calif. When asked about Powell’s remarks, the House speaker stressed his assessment that the nation will only "begin to see" improvement, and that the biggest risk to the economy remains another surge in COVID-19 cases. '
Who would have thought that GDP growth could be so controversial? Or that optimism about the economy could be such an affront to Democrats?
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Joe Biden and his Democrat colleagues want the country to continue cowering in terror. They know the only possible way to cram through trillions of dollars in handouts to Democrat-friendly groups is by convincing Americans the end is near. They have always been the party of alarmism, warning for instance that the world will end in 12 years if we fail to address climate change, but today their pessimism is pointed and purposeful.
It is also dangerous.
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While Republicans and Democrats argue over what Transportation Secretary Pete Buttigieg says are "semantics" – like whether hundreds of billions of dollars set aside for home care in the proposed "infrastructure" bill actually constitutes infrastructure – our country is piling up more debt relatively to our economy than at any time since World War II. We can agree that COVID has delivered a terrible blow to our nation, but as a national disaster it does not rank with the last Great War.
Here’s one way of assessing where we are and what kind of federal spending might make sense. In February 2009, as President Obama signed the $800 billion stimulus package, unemployment was 8.1%, on its way to 10%, and the number of unemployed Americans was 12.5 million, growing fast.
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By comparison, in March 2021, as Democrats (alone) passed the rescue plan, unemployment stood at 6%, was declining, and there were 10 million people out of work.
But it is this figure that tells us the $1.9 trillion in new spending was excessive: as Obama put federal money to work trying to offset the downturn caused by the financial crisis, there were only 3 million jobs open in the entire country, and the number was dropping. We know that from the JOLTs (or job openings) report from the Bureau of Labor Statistics.
By contrast, last month’s JOLTs report showed that on the last day of February this year, there were 7.4 million jobs available, and that figure was growing. If all those jobs were filled, unemployment would be close to where it was in February 2020, before COVID wrecked our nation.
Does it matter? Does excess spending hurt our country? Yes, the risks to our country are that the Democrats’ massive outlays will ignite damaging inflation, and that the expansion of welfare programs contained in the various "relief" bills will become a permanent part of our government, slowing future growth. These risks are real, and are being totally ignored by Democrats.
If the economy is recovering under its own steam, as Powell suggested and the data shows, why push out monster spending bills that could prove destabilizing?
Tackling that last assertion first, it is important to recognize the outsized scope of recent spending.
In 2000, federal outlays amounted to 17.4% of our nation’s output, measured by GDP. Last year, that figure topped 31%; that was before any spending from the American Rescue Plan.
This year, spending could be an even bigger piece of the budget. Keep in mind such figures do not include state and local spending, which in 2000 drove total government spending to 34% of GDP and last year pushed the total to 44% of GDP. That puts us not far behind Sweden (48%), often considered a near-socialist nation, and way above China at 34%.
The increasing portion of our nation’s output occupied by government spending is one reason why productivity has declined over time. Government spending is inefficient at best, counterproductive at worst. Think your local Department of Motor Vehicles compared to Amazon. Which gets the job done better?
Productivity growth is what allows for wage increases; as workers contribute more and their labor is more valuable, businesses can afford to pay more. It is important.
As to inflation, when too much money is chasing a limited amount of goods, prices go up.
Former Treasury Secretary Larry Summers has been outspoken on the risks of excessive spending, saying this past year reminds him of the period that caused the hyperinflation of the 1970s.
Summers told Bloomberg TV, "But as I look at $3 trillion of stimulus, $2 trillion of savings overhang, a major acceleration coming from COVID in the rear-view mirror, rates expected by the Federal Reserve to be at zero for three years even in a booming economy, record growth this year, major expansion of the Fed balance sheet, and much new fiscal stimulus to come — I'm worried."
Summers is today in the minority but he is right; inflation is a serious risk that others are beginning to signal as well. Ed Hyman, Wall Street’s longtime top economist, is among those looking for inflation to accelerate "more than expected."
Why take the chance? If the economy is recovering under its own steam, as Powell suggested and the data shows, why push out monster spending bills that could prove destabilizing?
Because Democrats cannot bear to let this crisis go without milking it for all its worth. The $2-plus trillion infrastructure bill is a horror, stuffed with payments to Big Labor and to minorities that helped get Joe Biden elected.
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There are no voices of moderation in today’s Democrat Party. There is a sense of desperation, an urge to spend like there’s no tomorrow.
What’s the rush? Maybe it is because Democrats know the public will reject their wanton vote-buying and risky spending in 2022, and take away their majorities in the House and Senate. Let’s hope they are correct.